What about HUD?

With still no clear signal on housing policy, Donald Trump’s early cabinet appointments bring more questions than answers when it comes to the future of the Federal Housing Administration, Department of Housing and Urban Development, Fannie Mae and Freddie Mac.

“We gotta get Fannie and Freddie out of government ownership,” Steven Mnuchin, Trump’s Treasury secretary pick, declared on Fox Business on Nov. 30. “It makes no sense that these are owned by the government and have been controlled by the government for as long as they have.”

Shares of the two entities that own or insure trillions of dollars in residential mortgage-backed securities, as well as more than $200 billion in securitized multifamily loans, shot up a combined 45 percent before the day’s closing bell. Investors took Mnuchin’s cues to mean that the government- sponsored enterprises and their profits would soon be unleashed.

Then, on Jan. 12, Ben Carson, Trump’s appointee to HUD — which until 2009 set Fannie’s and Freddie’s affordable lending goals — said at his confirmation hearing that “the private sector” could take over the effective guarantee for 30-year fixed-rate mortgages backed by the GSEs. Soon after, Mnuchin clarified his comments about both entities during his own confirmation hearing on Jan. 19, vowing to work with Democrats and Republicans to find an agreeable solution.

Shares of the GSEs, which had risen 185 percent since election day, fell three points before the day’s closing bell.

The current environment of unclear comments and unpredictable market reactions, a common trend in the initial weeks ofTrump’s presidency, has many housing experts and former officials scratching their heads. And while some are encouraged by a few ideas Carson has recently proposed in support of HUD programs — including rental assistance and low-income-housing tax credits — others say the new HUD secretary’s lack of housing experience makes his hiring decisions even more key.

“If he surrounds himself with good people, [his lack of experience] becomes less important,” Laurie Goodman, co-director of the Housing Policy Finance Center at Washington’s Urban Institute, told The Real Deal. “You need the expertise within the agency.”

Appointments for positions such as deputy secretary will give a better indication of the direction in which the Trump administration is pulling the strings, said Richard Green, a former senior adviser at HUD and director of the Lusk Real Estate Center at the University ofSouthern California. “You’ve got to watch and see who these people are that get those jobs,” Green noted. Rick Lazio, a former Republican Congressman from New York, is rumored as the top pick for HUD deputy, sources say.

But who’s at the department is just one part of the housing policy equation. Congress’ interest in taking on any housing reform and housing legislation will be another early indicator, said Benjamin Metcalf, HUD’s former deputy assistant secretary for multifamily housing and the current director ofCalifornia’s Department of Housing and Community Development.

Metcalf said he doesn’t expect removing the GSEs from government conservatorship to be one of Congress’ top priorities for now. “My personal suspicion is that it may be one of those things that everybody talks about getting around to, but it may be a few years before anyone really gets around to it,” he noted.

One Washington real estate lobbyist, who spoke on the condition of anonymity, simply pointed to the Capitol Building and said, “To be honest, it’s the folks in that building who are going to be deciding what the result is — not Dr. Carson.”

What comes out of the first federal budget under Trump, who has proposed 1 percent budget cuts annually for 10 years, could shake things up in a major way for HUD. In 2016, the agency had a budget of $47 billion dollars. But after the election, leaders of housing organizations began preparing for potential cuts, which could affect everything from community development block grants to funding for local public housing agencies.

And since it could take the president several months to release his first budget proposal, many say a continuing resolution that extends current spending levels is likely this April. Comprehensive tax reform — which could hurt certain real estate tax deductions and housing credits — will likely be in the mix, too.

On top of the potential belt-tightening, Trump has already put a freeze on federal hiring, effective Jan. 22. That could become a problem for Ginnie Mae, the government-owned corporation under HUD that guarantees mortgage-backed securities and had a secondary-mortgage market share of 39 percent as of 2015.

“Ginnie Mae is just way understaffed,” Green said. “They’re guaranteeing 1.7 trillion dollars of mortgage-backed securities and they have 140 people to monitor compliance. That’s more than $10 billion per person.”

Correction: An earlier version of this article stated that HUD sets Fannie Mae’s and Freddie Mac’s affordable lending goals. As of 2009, FHFA is the mission regulator for Fannie Mae and Freddie Mac.